According to the most recent U.S. Bank Freight Payment Index, the volume of freight transported by trucks and the amount spent on shipping in the second quarter of 2023 experienced a significant decline, reaching levels not seen since the initial stages of the pandemic. Shippers’ expenses decreased by 10.9% compared to the same period in 2022, while the quantity of shipments dropped by 9%. This information was disclosed by a statement issued by the Minneapolis-based bank.

“Trucking is in the midst of a significant slowdown,” said Bob Costello, senior vice president and chief economist at the American Trucking Associations. “Weaker consumer demand for goods and a slowdown in manufacturing activity and housing starts are having a major impact on the industry – especially carrier operations.”

For five quarters in a row, there has been a consistent nationwide decrease in shipment levels. In the second quarter, the Northeast and Southeast regions experienced the most significant decline in volume, with a year-over-year drop of 27.1% and 12.6%, respectively. However, the Southwest region stood out as a positive outlier, witnessing a 14.8% increase in shipments during the same period.

Truck freight spending levels have also faced year-over-year contractions for two consecutive quarters. While spending had reached all-time high levels in the six quarters before this, the recent declines brought it back to relatively strong levels seen in mid-2021.

The Midwest region saw the steepest spending drop in the second quarter, with a year-over-year decline of 18.7%. The Northeast and West regions also experienced significant reductions in spending, with drops of 10.9% and 10.2%, respectively, compared to the second quarter of 2022.

“In the spot market, we’ve been observing for a while sharp spending drops caused by lower volumes and increased capacity. This trend has now solidly penetrated the contract freight market,” said Bobby Holland, director of freight business analytics, U.S. Bank. “Nearly every category we track – both nationwide and regionally – contracted in the second quarter.”

The bank’s regional data found:

  • West: Truck freight continued to struggle in the West region as port activity and housing starts there continued to slow. This is the lowest point for shipments in the West in three years.
  • Southwest: Continuing to outperform other regions, the Southwest’s volume is benefiting from increased truck-transported trade with Mexico. The 14.8% year-over-year increase in shipments is the highest since 2018.
  • Midwest: Continued slowdowns in manufacturing likely led to year-over-year shipments dropping by the largest level in the region since Q4 2021. Yearly spending also dropped by the largest amount since Q2 2020.
  • Northeast: The 27.1% volume contraction is the largest in the history of the Freight Payment Index. The region faces multiple headwinds, including low housing starts. However, the contraction in household consumption likely had the biggest impact for this populated area.
  • Southeast: Even though shipments contracted 12.6% year over year and slightly on a linked quarter basis, this was an improvement for the region. In the first quarter, shipments fell 16.1% year over year and 10.1% on a linked quarter basis.